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Item 7. Management’s Discussion and Analysis

2025-03-17 compared with 2024-02-29 · 256 added, 222 removed, 923 unchanged (34% of the section changed)

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The burden of diseases that can be addressed at their root cause through engineered cells is significant.

We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice.

The key to making this vision a reality will be finding consistent and scalable means of manufacturing cell-based medicines, and we have invested significantly in our hypoimmune platform (HIP) technology with the twin goals of using allogeneic cells that evade immune detection in patients and that we can manufacture at scale.

We are developing cell engineering programs to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including oncology, diabetes, B-cell-mediated autoimmune, and central nervous system disorders, among others.

We currently have four clinical trials that are ongoing, or that we expect to commence in the near-term, evaluating our product candidates, or product candidates developed using our technologies, across seven diseases in multiple therapeutic areas, including B-cell malignancies, B-cell-mediated autoimmune disease, and type 1 diabetes, as described below.

• ARDENT is an ongoing Phase 1 clinical trial evaluating SC291, our HIP-modified CD19 targeted allogeneic chimeric antigen receptor (CAR) T program, in B-cell malignancies, including non-Hodgkin’s lymphoma and chronic lymphoblastic leukemia;

• GLEAM is a Phase 1 clinical trial evaluating SC291 in patients with lupus nephritis, extrarenal lupus, and antineutrophil cytoplasmic antibody (ANCA)-associated vasculitis;

• VIVID is a Phase 1 clinical trial evaluating SC262, our HIP-modified CD22 CAR T program, in patients with relapsed or refractory B-cell malignancies who have received prior CD19 CAR T therapy;

• Investigator-sponsored first-in-human study (IST) evaluating UP421 an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with type 1 diabetes mellitus.

We seek to overcome several existing limitations of gene and cell therapy through our ex vivo and in vivo cell engineering platforms, both of which may facilitate the development of therapies that can transform the lives of patients by repairing cells in the body when possible and replacing them when needed.

For ex vivo therapies, when diseased cells are damaged or missing entirely and an effective therapy needs to replace the entire cell, a successful therapeutic requires large-scale manufacturing of cells that engraft, function, and persist in the body.

Of these, we view cell persistence as the greatest current limitation to dramatically expanding the impact of this class of therapeutics, and in particular, overcoming the barrier of immune rejection of transplanted allogeneic cells.

We believe that product candidates developed with our ex vivo cell engineering platform, which uses HIP-modified allogeneic cells that can “hide” from the patient’s immune system, can address this fundamental limitation and unlock a wave of disruptive therapeutics.

We refer to this technology as our hypoimmune platform.

We view engineered cells as having the potential to be as therapeutically disruptive as biologic drugs to clinical practice, enabling us to repair cells in the body when possible and replace them when needed.

We are developing ex vivo and in vivo cell engineering platforms to revolutionize treatment across a broad array of therapeutic areas with unmet treatment needs, including type 1 diabetes, B cell mediated autoimmune diseases, and oncology.

For our ex vivo platform, we have made focused investments in our hypoimmune platform technology, which we refer to as our HIP technology, with the twin goals of engineering allogeneic cells that can "hide" from the patient's immune system to overcome the fundamental challenge of immune rejection and cell persistence, and that we can manufacture at scale.

A successful therapeutic requires cells that can engraft, function, and persist in the body, and we believe our approach can unlock a wave of disruptive therapeutics.

For in vivo therapies that aim to repair and control genes in the body, a successful product candidate requires both gene modification and in vivo delivery of the therapeutic payload.

Of these, we view effective in vivo delivery as the greatest current limitation to dramatically expanding the impact of this class of therapeutics.

To this end, our initial focus is on cell-specific delivery of genetic payloads.

Based upon early clinical as well as extensive preclinical data from our HIP platform, we decided in October 2023 to focus a meaningful portion of our research and development resources for at least the next several years ion HIP-modified ex vivo manufactured cells as therapeutics.

To this end, our initial focus is on cell-specific delivery of genetic payloads that integrate into the genome of the target cells.

We currently focus our efforts across three areas and have three ongoing clinical trials across multiple disease types and therapeutic areas, including type 1 diabetes (T1D), B cell mediated autoimmune diseases, and B cell malignancies.

• Type 1 Diabetes:

Approximately nine million people suffer from T1D worldwide, and there have been no major novel medicines for the disease since insulin.

We are developing SC451, a HIP-modified, stem cell derived pancreatic islet cell therapy, for the treatment of type 1 diabetes.

The goal of this therapy is euglycemia, or normal blood glucose, without the need for exogenous insulin injections or immunosuppression.

We currently have an ongoing investigator-sponsored first-in-human study (IST) evaluating UP421, an allogeneic, primary islet cell therapy engineered with our HIP technology, in patients with T1D.

We expect to share additional data in 2025 and file an investigational new drug application (IND) for SC451 as early as 2026.

• Allogeneic CAR T cells :

We are developing SC291, our HIP-modified allogeneic CD19-directed allogeneic CAR T cell product candidate, in patients with B cell mediated autoimmune diseases.

The GLEAM study is a Phase 1 clinical trial evaluating SC291 in patients with lupus nephritis (LN), extrarenal lupus (ERL), and antineutrophil cytoplasmic antibody (ANCA)-associated vasculitis.

If successful, SC291 has the potential to benefit patients in a number of additional B cell-mediated autoimmune diseases.

We are also studying SC262, our HIP-modified allogeneic CD22-directed CAR T cell product candidate.

The VIVID study is a Phase 1 clinical trial evaluating SC262 in patients with relapsed and/or refractory (R/R) B cell malignancies who have received prior CD19-directed CAR T therapy.

We are enrolling patients in both the GLEAM and VIVID trials and expect to share data from each study in 2025.

• In vivo CAR T cells :

Using our fusogen platform, which allows for cell-specific, in vivo delivery of various payloads, we are developing our SG299 product candidate, which is a CD8-targeted fusosome that delivers to CD8+ T cells the genetic material to make CD19-directed CAR T cells while avoiding delivery to potentially troublesome tissues such as the liver and gonadal tissue.

We plan to develop SG299 in a range of B cell cancers and B cell mediated autoimmune diseases and expect to file an IND for SG299 as early as 2026.

We believe the time is right to develop engineered cell therapies across a broad range of therapeutic areas.

Substantial progress in the understanding of genetics, gene editing, protein engineering, stem cell biology, immunology, process analytics, and computational biology have converged to create an opportunity to markedly increase the breadth and depth of the potential impact of cellular medicines.

We continue to make progress developing our ex vivo cell engineering platforms – our hypoimmune allogeneic CAR T cell platform and our stem-cell derived platform that also leverages our HIP technology.

We are in the early stages of development across a broad pipeline of product candidates, which are summarized below:

Each of our initial programs provides the potential for meaningful standalone value while also supporting our potential ability to further exploit our platforms in a manner that leads to the development of broadly applicable medicines.

Based on our current timelines for our lead programs, we believe our cash runway will enable multiple data readouts across our programs.

In 2023 and 2024, the FDA cleared our Investigational New Drug (IND) applications for each of the ARDENT, GLEAM, and VIVID trials, and we supported the submission of a clinical trial application for an IST, which was authorized by the Swedish Medical Products Agency.

These four trials will evaluate our product candidates across seven diseases in multiple therapeutic areas, including B-cell malignancies, B cell-mediated autoimmune diseases, and type 1 diabetes.

We expect to share data from each of these trials in 2024.

Additionally, we continue to make progress on advancing our research- and preclinical-stage product candidates into and through preclinical development and toward potential IND submissions in 2024 and beyond.

1 Investigator sponsored trial.

Abbreviations:

AAV, ANCA-associated vasculitis;

NHL, non-Hodgkin's lymphoma;

SLE, systemic lupus erythematosus;

T1D, type 1 diabetes;

WW, worldwide.

Each of our programs provides the potential for meaningful standalone value while also supporting our potential ability to further exploit our platforms in a manner that leads to the development of broadly applicable medicines.

Based on our current timelines for our lead programs, we believe our cash runway will enable multiple data readouts across our programs in 2025.

In early 2025, we announced positive four-week results from the UP421 IST demonstrating that all primary and secondary endpoints were met.

Results of the study at four weeks and preliminary results at 12 weeks after cell transplantation demonstrate the survival and function of pancreatic beta cells as measured by the presence of circulating C-peptide, a biomarker indicating that transplanted beta cells are producing insulin.

C-peptide levels also increase with a mixed meal tolerance test (MMTT) during testing at these timepoints, consistent with insulin secretion in response to a meal.

Magnetic resonance imaging (MRI) scanning also demonstrated a sustained signal at the site of transplanted cells over time, which is consistent with graft survival.

The study identified no safety issues, and the HIP-modified islet cells evaded immune detection.

The trial continues to evaluate safety, persistence, and function of the transplanted cells.

The 12-week data remain subject to source data verification, after which we and our collaborators at Uppsala University Hospital expect to publish in scientific journals and/or present at scientific conferences more details and longer follow-up from this study in 2025 and beyond.

We continue to make progress on advancing our research- and preclinical-stage product candidates into and through preclinical development and toward potential IND submissions.

As certain of our product candidates advance toward potential IND submissions, we are conducting good laboratory practices toxicity studies and establishing necessary scale-up for our manufacturing processes.

Given the depth and breadth of our portfolio, we expect to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others.

For details regarding our product candidates and programs, see the section titled “Business— Overview” in Part I, Item 1 included elsewhere in this Annual Report.

Our ex vivo and in vivo technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California, our ex vivo cell engineering program focused on certain brain disorders acquired from Oscine Corp., fusogen technology acquired from Cobalt Biomedicines Inc.

Given the depth and breadth of our portfolio, we expect to continue to assess and prioritize our programs on an ongoing basis based on various factors, including internal and external opportunities and constraints, which may result in our decision to advance certain programs ahead or instead of others.

For details regarding our product candidates, see the section titled “Business—Overview” in Part I, Item 1 included elsewhere in this Annual Report.

In November 2024, we announced a portfolio prioritization to prioritize clinical and preclinical development in type 1 diabetes, B-cell mediated autoimmune diseases, refractory B-cell malignancies, and the fusogen platform for generating in vivo CAR T cells.

We suspended development of SC291, our HIP-modified CD19 allogeneic CAR T therapy, in oncology, and SC379, our glial progenitor cell program, as we seek partnerships for these programs.

As part of these efforts, we are winding down the ARDENT Phase 1 clinical trial evaluating SC291 in B-cell malignancies, including non-Hodgkin’s lymphoma and chronic lymphoblastic leukemia.

In connection with the portfolio prioritization, we expect to incur approximately $5.8 million of cash-based expenses related to employee severance, benefits, and related costs.

We anticipate that the portfolio update and associated workforce reduction will be substantially complete in the first quarter of 2025.

Our ex vivo and in vivo technologies represent an aggregation of years of innovation and technology from multiple academic institutions and companies, including hypoimmune technology licensed from the President and Fellows of Harvard College (Harvard) and The Regents of the University of California, fusogen technology acquired from Cobalt Biomedicine Inc.

(Cobalt), and gene editing technology licensed from Beam Therapeutics Inc.

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For details regarding these acquisitions and license and collaboration agreements, see Note 4, Acquisitions and Note 5, License and collaboration agreements, to our consolidated financial statements included in this Annual Report, as well as the section titled “Business—Key Intellectual Property Agreements” in Part I, Item 1 included elsewhere in this Annual Report.

Our operations to date have included developing our ex vivo and in vivo cell engineering platforms, identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, conducting clinical trials of our product candidates, supporting clinical trials of product candidates developed using our technologies, acquiring technology, organizing and staffing the company, business planning, establishing and maintaining our intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

Our operations to date have included developing our ex vivo and in vivo cell engineering platforms, identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, conducting clinical trials of our product candidates, supporting clinical trials of product candidates developed using our technologies, acquiring technologies, staffing the company, business planning, establishing and maintaining our intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

All of our programs are currently in the development stage, and we do not have any products approved for sale.

Since our inception, we have incurred net losses each year.

We have incurred net losses each year since our inception.

Our net losses for the years ended December 31, 2024, 2023, and 2022 were $266.8 million, $283.3 million, and $269.5 million, respectively.

As of December 31, 2023, we had an accumulated deficit of $1.3 billion, which includes cumulative non-cash charges of $10.3 million and $58.3 million related to the revaluation of the success payment and contingent consideration liabilities, respectively.

As of December 31, 2024, we had an accumulated deficit of $1.6 billion.

Our net losses resulted primarily from our research and development programs, and, to a lesser extent, general and administrative costs associated with our operations.

In February 2024, we completed an underwritten public offering pursuant to which we sold 21.8 million shares of our common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of our common stock for net proceeds of approximately $179.9 million, after deducting underwriting discounts and commissions and estimated offering expenses.

In August 2022, we entered into a sales agreement with Cowen and Company, LLC (Cowen), acting as sales agent, pursuant to which we may offer and sell through Cowen up to $150.0 million in shares of our common stock from time to time in a series of one or more at the market equity offerings (collectively, the ATM facility).

To date we sold an aggregate of 4.9 million shares of our common stock under the ATM facility for net proceeds of $28.7 million after deducting commissions and expenses.

In February 2021, we completed our initial public offering (IPO) and issued 27.0 million shares of our common stock, including 3.5 million shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, for net proceeds of $626.4 million after deducting underwriting discounts and commissions and estimated offering expenses.

Prior to the IPO, we funded our operations from the issuance and sale of our convertible preferred stock, raising an aggregate of $705.0 million in net proceeds.

As of December 31, 2024, we had cash, cash equivalents, and marketable securities of $152.5 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months from the filing of this Annual Report.

We expect our operating losses and expenses to decrease in 2024, excluding potential one-time items, as a result of our strategic repositioning in October 2023, and likely increase over the longer term from the 2024 level if our clinical trials are successful, and if we expand our research and development efforts.

Cost increases would be driven in large part by advancing our current and future product candidates into and through clinical trials;

We will need to raise additional financing in the near-term and in the future to fund our operations, including the commercialization of any approved product candidates.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements.

Additional capital may not be available on terms that are reasonable or acceptable to us, if at all.

If we are unable to raise capital when needed or on attractive terms, our business, results of operations, and financial condition would be adversely affected.

Management has determined that our present capital resources may not be sufficient to fund our planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to our ability to continue as a going concern.

Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations.

We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If we are unable to obtain such financing, we may be required to significantly modify our operational plans by delaying, reducing the scope of, or ceasing our research and development programs.

We expect our operating losses and expenses to decrease in 2025 compared to 2024 as a result of our portfolio prioritization announced in November 2024.

Operating expenses may increase over the longer term if our clinical trials are successful and if we expand our research and development efforts.

Cost increases would be driven in large part by commencing and advancing our current and future product candidates through clinical trials;

identifying additional product candidates;

establishing our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs) and building our internal manufacturing capabilities;

advancing preclinical development of our current and future product candidates;

continuing to establish our manufacturing capabilities, including through third-party contract development and manufacturing organizations (CDMOs) and our internal manufacturing capabilities;

initiating and advancing preclinical development of our current and future product candidates;

advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms;

acquiring and licensing technologies aligned with our ambition of translating engineered cells to medicines;

acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements;

seeking regulatory approval of our current and future product candidates;

increasing our workforce to support our research, clinical and preclinical development, manufacturing, and commercialization efforts;

engaging in commercialization activities for any of our product candidates for which we obtain marketing approval;

increasing our personnel, including those required to support our research, clinical and preclinical development, manufacturing, and potential future commercialization efforts;

expanding our operational, financial, and management systems;

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and continuing to incur legal, accounting, or other expenses to operate our business, including the costs associated with being a public company.

We continue to invest in building world class capabilities in key areas of manufacturing sciences and operations, including development of our cell engineering platforms, product characterization, and process analytics.

Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing, including establishing our internal manufacturing capabilities.

In October 2023, we announced a strategic repositioning to increase our focus on our ex vivo cell therapy product candidates.

As a result, we reduced our near-term investment in our fusogen platform for in vivo gene delivery, including by delaying the IND submission for our SG299 program.

The strategic repositioning resulted in a workforce reduction of approximately 29%.

We incurred approximately $5.2 million of cash-based expenses related to employee severance, benefits, and related costs.

The strategic repositioning and associated workforce reduction is substantially complete, and is expected to result in 2024 operating cash burn of less than $200.0 million.

We anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and upfront, milestone, and royalty payments received under any future licenses, collaborations, or other arrangements.

Additional capital may not be available on terms that are reasonable or acceptable to us, if at all.

If we are unable to raise capital when needed or on attractive terms, our business, results of operations, and financial condition would be adversely affected.

We have invested in building world class capabilities in key areas of manufacturing sciences and operations, including development of our cell engineering platforms, product characterization, and process analytics.

Our investments also include scaled research solutions, scaled infrastructure, and novel technologies to improve efficiency, characterization, and scalability of manufacturing.

Macroeconomic Considerations

Our business and operations may be negatively affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges such as the timing of changes to inflation and interest rates, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic stability resulting from the ongoing Russia-Ukraine war, conflict in the Middle East, tensions in U.S.-China relations, and the aftermath of the COVID-19 pandemic.

The severity and duration of the impact of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods.

Our business and operations may be negatively affected by worldwide economic conditions, which may continue to be impacted by global macroeconomic challenges such as changes in trade policies, including sanctions, treaties, tariffs, regulatory requirements, and other limitations on cross-border operations, changes in inflation and fluctuations in interest rates, instability in the banking and financial services sector, declines in consumer confidence, declines in economic growth, uncertainty in the markets, geo-political and economic instability, and tensions in U.S.-China relations.

The extent, severity, and duration of the impact of these events and conditions on our business cannot be predicted and may not be fully reflected in our results of operations until future periods.

If economic uncertainty continues or increases, or if the global economy worsens, our business, financial condition, and results of operations may be harmed.

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Research and development expenses are recognized as incurred, and payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.

Research and development expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs) and clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with our goal of translating engineered cells to medicines, and facility expenses, including rent and depreciation, and allocated overhead costs.

Research and development expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs) and clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with our ex vivo and in vivo cell engineering platforms, and facility expenses, including rent and depreciation, and allocated overhead costs.

The timing and amount of costs to acquire and license technologies in the future cannot be reliably estimated and may fluctuate from quarter to quarter and year to year.

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Research and development activities account for a significant portion of our operating expenses.

As a result of our strategic repositioning in October 2023, we anticipate that our research and development expenses will decrease in 2024, excluding potential one-time items, and likely increase over the longer term from the 2024 level if our clinical trials are successful and if we expand our research and development efforts.

Cost increases would be driven in large part by advancing our current and future product candidates into and through clinical trials;

As a result of our portfolio prioritization and associated workforce reduction announced in November 2024, we expect our research and development expenses to decrease in 2025 compared to 2024.

Research and development expenses may increase over the longer term if our clinical trials are successful and if we expand our research and development efforts.

Cost increases, if they occur, would be driven in large part by advancing our current and future product candidates into and through clinical trials;

identifying additional product candidates;

establishing internal and external manufacturing capabilities;

advancing preclinical development of our current and future product candidates;

continuing to establish our manufacturing capabilities, including through third-party CDMOs and our internal manufacturing capabilities;

initiating and advancing preclinical development of our current and future product candidates;

advancing and expanding the capabilities of our ex vivo and in vivo cell engineering platforms;

acquiring and licensing technologies aligned with our ambition of translating engineered cells to medicines;

acquiring and licensing technologies aligned with our ex vivo and in vivo cell engineering platforms, or modifying the terms of existing acquisition or license arrangements;

seeking regulatory approval of our current and future product candidates;

and increasing our workforce to support our expanded research and development operations.

and increasing our workforce to support our expanded research, clinical, and preclinical development efforts.

A change in the outcome of any of these factors could result in a significant change in the costs and timing associated with the development of our product candidates.

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Research and development related success payments and contingent consideration include the change in the estimated fair value of our Cobalt and Harvard Success Payment liabilities and Cobalt Contingent Consideration liability.

The expense or gain associated with our research and development related success payments and contingent consideration is unpredictable, in part, because our success payments are impacted by changes in our common stock price and market capitalization at the end of each reporting period, and may continue to vary significantly from quarter to quarter and year to year due to changes in the assumptions used in the calculations.

The expense or gain associated with our research and development related success payments and contingent consideration is unpredictable, in part, because our success payments are impacted by changes in our common stock price and market capitalization at the end of each reporting period, and continues to vary significantly from quarter to quarter and year to year due to changes in the assumptions used in the calculations.

General and administrative

General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, and facility costs not otherwise included in research and development expenses.

General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation for our employees in finance, legal, executive, human resources, and information technology functions, legal and consulting fees, insurance fees, restructuring expenses, and facility costs not otherwise included in research and development expenses.

Legal fees include those related to corporate and patent matters.

Included in general and administrative expenses for the year ended December 31, 2023, are costs related to our strategic repositioning and associated workforce reduction in October 2023 and costs incurred for the early termination of the lease (Fremont lease) for our previously planned manufacturing facility in Fremont, California (Fremont facility).

Included in general and administrative expenses for the year ended December 31, 2022, are costs related to our portfolio prioritization and corporate restructuring in November 2022 and the write-off of construction in progress costs incurred in connection with the Fremont facility.

As a result of our strategic repositioning and associated workforce reduction in October 2023, we anticipate that our general and administrative expenses will decrease in 2024, excluding potential one-time items, and likely increase over the longer term from the 2024 level to support potential expanded research and development activities.

Included in general and administrative expenses for the year ended December 31, 2023, are costs incurred for the early termination of the lease (Fremont lease) for our previously planned manufacturing facility in Fremont, California (Fremont facility).

As a result of our portfolio prioritization and associated workforce reduction commenced in November 2024, we expect our general and administrative expenses to decrease in 2025 compared to 2024.

General and administrative expenses may increase over the longer term to support potential expanded research and development activities.

Results of operations

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(in thousands)

Research, development, and laboratory

Research and laboratory

Third-party manufacturing

Licensing of technology

Impairment of lab equipment and leasehold improvements

Facility and other allocated costs

Impairment of lab equipment and leasehold improvements

Clinical development

Total research and development expense

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The decrease of $51.3 million was primarily due to:

• a decrease of $10.3 million in research and laboratory costs, primarily due to our strategic repositioning in 2022 and 2023, partially offset by an increase in clinical development costs as more programs move into the clinic;

• a decrease of $7.1 million in third-party manufacturing costs for CDMOs, including pass-through costs for materials;

• a decrease of $5.8 million in costs to license technology for our CD22 and BCMA programs;

• a decrease of $4.3 million in personnel-related costs, including $3.3 million in non-cash stock-based compensation expense.

These decreases were partially offset by $7.0 million for the impairment of certain lab equipment and leasehold improvements, primarily related to the strategic repositioning in October 2023.

• a decrease of $20.6 million in research expenses primarily due to lower research and development activities;

• a net decrease of $20.1 million in personnel-related expenses due to lower research and development headcount related to the portfolio prioritizations in the fourth quarters of 2023 and 2024;

• a decrease of $9.7 million in third-party manufacturing costs for CDMOs;

• a decrease of $5.8 million in facility and other allocated costs;

• a decrease of $5.1 million for impairment of lab equipment and leasehold improvements recorded in 2024 compared to 2023.

These decreases were partially offset by an increase of $11.8 million in clinical development costs.

Research and development related success payments and contingent consideration

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The gains related to the change in the estimated fair value of our Cobalt Success Payment were $6.9 million and $7.9 million for the years ended December 31, 2024 and 2023, respectively.

The changes in value were primarily due to changes in our market capitalization during the relevant periods, and for 2023, the reduction of our near-term investment in our fusogen program in connection with our strategic repositioning.

The gains related to the change in the estimated fair value of our Harvard Success Payments were $1.3 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.

The change in value were primarily due to changes in our common stock price during the relevant periods.

The changes in value were primarily due to changes in our common stock price during the relevant periods.

The gains related to the change in the estimated fair value of our Cobalt Contingent Consideration were $0.6 million and $40.8 million for the years ended December 31, 2024 and 2023, respectively.

The changes in value were due to the reduction of our near-term investment in our fusogen programs, including delaying the IND for SG299, which impacted the timing and probability of the achievement of milestones.

The changes in value were due primarily to changes in the timing and probability of the achievement of milestones during the relevant periods and the discount rates used in the calculations.

General and administrative expenses

General and administrative expenses were $64.0 million and $73.3 million for the years ended December 31, 2024 and 2023, respectively.

The increase of $1.7 million was primarily due to an increase in patent and other legal fees of $4.3 million, a loss on lease termination of $2.7 million associated with the Fremont facility, and increased facility costs of $1.0 million.

These increases were partially offset by the write-off of $4.5 million of construction in progress costs in 2022 for the Fremont facility and a decrease of $2.1 million in insurance costs.

The decrease of $9.3 million was primarily due to a decrease in legal fees of $3.1 million, a loss on lease termination of $2.7 million associated with the Fremont facility recorded in 2023, a decrease in personnel costs of $2.6 million, a decrease in facility costs of $1.9 million, and a decrease in insurance and consulting fees of $1.1 million.

These decreases were partially offset by an increase in non-cash stock-based compensation of $2.0 million.

Interest income, net

Interest income, net, was $10.5 million and $9.9 million for the years ended December 31, 2024 and 2023, respectively, and consisted primarily of interest earned on our cash and marketable securities balances.

Other expense, net

Other expense, net, was $4.5 million and immaterial for the years ended December 31, 2024 and 2023, respectively.

The change in value of $4.5 million was due to other-than-temporary impairments of other assets.

Comparison of the years ended December 31, 2023 and 2022

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Interest income, net

Other income (expense)

Other expense, net

Research and development expenses

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(in thousands)

Research and laboratory

Facility and other allocated costs

Research, development, and laboratory

Third-party manufacturing

Licensing of technology

Impairment of lab equipment and leasehold improvements

Facility and other allocated costs

Total research and development expense

Research and development expenses were $268.8 million and $285.9 million for the years ended December 31, 2023 and 2022, respectively.

The increase of $37.3 million was primarily due to:

• increased personnel-related expenses of $32.2 million, including an increase in non-cash stock-based compensation of $11.3 million, which was primarily attributable to an increase in headcount to expand our research and development capabilities;

• an increase of $16.6 million in research, development, and laboratory costs;

• an increase of $16.5 million primarily related to allocated personnel costs, depreciation expense, and facility and software costs;

• an increase of $16.2 million in third-party manufacturing costs for CDMOs, including pass-through costs for materials.

These increases were offset by a decrease of $45.6 million in costs to license technology.

Licensing costs in 2022 include an upfront payment of $6.0 million related to licensing technology for our CD22 and BCMA programs, and licensing costs in 2021 include an upfront payment of $50.0 million in 2021 related to licensing Beam’s gene editing technology.

The decrease of $17.1 million was primarily due to:

• a decrease of 10.3 million in research and laboratory costs, primarily due to our portfolio prioritizations in 2022 and 2023, partially offset by an increase in clinical development costs as more programs moved into the clinic;

• a decrease of $7.1 million in third-party manufacturing costs for CDMOs, including pass-through costs for materials;

• a decrease of $5.8 million in costs to license technology for our CD22 and BCMA programs;

• a decrease of $4.3 million in personnel-related costs, including $3.3 million in non-cash stock-based compensation expense.

These decreases were partially offset by $7.0 million for the impairment of certain lab equipment and leasehold improvements, primarily related to the portfolio prioritization in October 2023.

Research and development related success payments and contingent consideration

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Total research and development related success payments and contingent consideration

The gain related to the change in the estimated fair value of our Cobalt Success Payment was $69.3 million for the year ended December 31, 2022, compared to an expense of $23.6 million for the same period in 2021.

The change in value was due to the reduction in our market capitalization offset by progress toward filing an IND for SG299 during the relevant period.

The gain related to the change in the estimated fair value of our Harvard Success Payments was $12.2 million for the year ended December 31, 2022, compared to an expense of $2.4 million for the same period in 2021.

The changes in value were due to changes in our common stock price during the relevant period.

The gain related to the change in the estimated fair value of our Cobalt Contingent Consideration was $3.4 million for the year ended December 31, 2022, compared to an expense of $31.8 million for the same period in 2021.

The change in value was primarily due to variability of the discount rates used in the calculation offset by scientific progress toward the achievement of milestones during the relevant period.

The gains related to the change in the estimated fair value of our Cobalt Success Payment were $7.9 million and $69.3 million for the years ended December 31, 2023 and 2022, respectively.

The gains related to the change in the estimated fair value of our Harvard Success Payments were $0.3 million and $12.2 million for the years ended December 31, 2023 and 2022, respectively.

The changes in value were primarily due to changes in our common stock price during the relevant periods.

The gains related to the change in the estimated fair value of our Cobalt Contingent Consideration were $40.8 million and $3.4 million for the years ended December 31, 2023 and 2022, respectively.

The changes in value were primarily due to the reduction of our near-term investment in our fusogen programs, including delaying the IND for SG299, which impacted the timing and probability of the achievement of milestones.

General and administrative expenses

General and administrative expenses were $73.3 million and $71.6 million for the years ended December 31, 2023 and 2022, respectively.

The increase of $21.2 million was primarily due to costs related to the November 2022 restructuring of $8.7 million, including non-cash stock-based compensation of $1.9 million, the write-off of $4.5 million of construction in progress costs incurred in connection with the Fremont facility, an increase in personnel-related costs of $4.0 million primarily attributable to an increase in headcount to build our infrastructure and support our continued research and development activities, operating costs related to the Fremont facility of $1.9 million, and increased facility costs of $1.0 million.

These increases were partially offset by the write-off of $4.5 million of construction in progress costs in 2022 for the Fremont facility and a decrease of $2.1 million in insurance costs.

Interest income, net

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To date we have raised an aggregate of approximately $1.5 billion in net proceeds from sales of common stock and private placements of our convertible preferred stock.

In February 2024, we completed an underwritten public offering pursuant to which we sold 21.8 million shares of our common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of our common stock for net proceeds of approximately $180.0 million, after deducting underwriting discounts and commissions and offering expenses.

In August 2022, we entered into a sales agreement with Cowen, acting as sales agent, pursuant to which we may offer and sell through Cowen, up to $150.0 million in shares of our common stock under the ATM facility.

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Future funding requirements

We expect to incur additional losses for the foreseeable future as we conduct and expand our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, establishing internal and external manufacturing capabilities, and funding our operations generally.

However, we anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates.

We expect to incur additional losses for the foreseeable future as we conduct our research and development efforts, including conducting clinical trials and preclinical studies, developing new product candidates, continuing to establish internal and external manufacturing capabilities, and funding our operations generally.

We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.

Our ability to continue as a going concern will depend on, among other things, our ability to obtain additional funding and appropriately manage the amount of cash used to fund our operations.

We plan to address this condition through equity or debt offerings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If we are unable to obtain such financing, we may be required to significantly modify our operational plans by delaying, reducing the scope of, or ceasing our research and development programs.

Our future capital requirements will depend on many factors, including:

• the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current or future product candidates;

• the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current or future product candidates, including the development of companion diagnostics to such product candidates;

• the number and scope of clinical trials required for regulatory approval of our current or future product candidates;

• the costs, timing, and outcome of regulatory review of our current or future product candidates;

• the cost, timing, and scope of building our manufacturing capabilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates;

• the costs, timing, and outcome of regulatory review of our current or future product candidates and any companion diagnostics to such product candidates;

• the cost, timing, and scope of our manufacturing capabilities, as well as costs associated with the manufacturing of clinical and commercial supplies of our current and future product candidates;

• the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;

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• the expenses required to attract, hire, and retain skilled personnel;

• the impact of global supply chain issues and rising rates of inflation on the costs of laboratory consumables, supplies, and equipment required for our ongoing operations;

• the impact of global supply chain issues and changing rates of inflation on the costs of laboratory consumables, supplies, and equipment required for our ongoing operations;

• the costs of operating as a public company;

• our ability to effectively manage the amount of cash used in our operations;

• our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party, including government, payors;

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• the extent to which we acquire or invest in businesses, products, and technologies.

Until such time, if ever, as we can generate significant revenue from product sales, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and upfront, milestone, and royalty payments received under any future licenses, collaborations, or other arrangements.

Until such time, if ever, as we can generate significant revenue from product sales, we expect to finance our operations with our existing cash, cash equivalents, and marketable securities, proceeds from any future equity or debt financings, and milestone, royalty, and other payments received under any future licenses, collaborations, or other arrangements.

In the event that additional financing is required, we may not be able to raise it on terms that are acceptable to us or at all.

Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, conflicts in Ukraine, the Middle East, or other regions, changes in inflation, interest rate uncertainty, and other factors creating market risk.

Recent bank failures have also caused increased concerns about liquidity in the broader financial services industry, and our business, business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time.

Our ability to raise additional financing may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from public health crises, the escalation in conflict in Ukraine and the Middle East, or other regions, changes in inflation, interest rate uncertainty, disruptions in global trade caused by political tensions and conflicts between countries, and other factors creating market risk.

Bank failures have also caused increased concerns about liquidity in the broader financial services industry, and our business, business partners, or industry as a whole may be adversely impacted in ways that we cannot predict at this time.

If we raise additional funds through the issuance of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

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Financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Operating activities

During the year ended December 31, 2024, net cash used in operating activities was $223.2 million, consisting primarily of net loss of $266.8 million and the change in net operating assets and liabilities of $1.2 million, offset by non-cash charges of $44.8 million.

The non-cash charges of $44.8 million consisted of non-cash stock-based compensation expense of $37.7 million and depreciation expense of $17.4 million, offset by gains of $8.2 million and $0.6 million for revaluation of our success payment liabilities and contingent consideration, respectively, and other non-cash charges of $1.5 million.

During the year ended December 31, 2023, net cash used in operating activities was $253.6 million, consisting primarily of net loss of $283.3 million, the change in net operating assets and liabilities of $18.6 million, and non-cash charges of $11.1 million.

The non-cash charges of $11.1 million consisted of gains of $40.8 million and $8.2 million for revaluation of our success payment liabilities and contingent consideration, respectively, non-cash stock-based compensation expense of $35.5 million, and depreciation expense of $24.6 million, which includes $7.0 million for the impairment of certain lab equipment and leasehold improvements which were primarily related to the strategic repositioning in October 2023.

During the year ended December 31, 2022, net cash used in operating activities was $290.1 million, consisting primarily of our net loss of $269.5 million, the change in net operating assets and liabilities of $7.5 million, and non-cash charges of $28.1 million.

The non-cash charges of $11.1 million consisted of non-cash stock-based compensation expense of $35.5 million and depreciation expense of $24.6 million, which includes $7.0 million for the impairment of certain lab equipment and leasehold improvements which were primarily related to the portfolio prioritization in the fourth quarter of 2023, partially offset by gains of $40.8 million and $8.2 million for revaluation of our success payment liabilities and contingent consideration, respectively.

During the year ended December 31, 2022, net cash used in operating activities was $290.1 million, consisting primarily of net loss of $269.5 million, the change in net operating assets and liabilities of $7.5 million, and non-cash charges of $28.1 million.

The non-cash charges of $28.1 million consisted of gains of $81.5 million and $3.4 million for revaluation of our success payment liabilities and contingent consideration, respectively, non-cash stock-based compensation expense of $38.3 million, depreciation expense of $15.6 million, and other non-cash charges of $2.9 million.

During the year ended December 31, 2021, net cash used in operating activities was $251.0 million, consisting primarily of our net loss of $355.9 million, partially offset by the change in our net operating assets and liabilities of $9.8 million and non-cash charges of $95.1 million.

The non-cash charges of $95.1 million consisted of $31.8 million for revaluation of contingent consideration, $26.0 million for revaluation of our success payment liabilities, non-cash stock-based compensation expense of $22.4 million, depreciation expense of $11.1 million, and other non-cash charges of $3.8 million.

Investing activities

Cash provided by investing activities was $172.0 million during the year ended December 31, 2023, and cash used in investing activities was $210.6 million and $245.8 million during the years ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2023, this consisted of net purchases and maturities of marketable securities of $192.0 million offset by the purchase of property and equipment of $20.0 million.

For the years ended December 31, 2022 and 2021, this consisted of net purchases and maturities of marketable securities of $231.5 million and $211.3 million, respectively, and purchases of property and equipment of $20.9 million and $29.9 million, respectively.

Cash provided by investing activities was $17.5 million, $172.0 million, and $210.6 million during the years ended December 31, 2024, 2023, and 2022, respectively.

For the years ended December 31, 2024, 2023, and 2022, this consisted of net purchases and maturities of marketable securities of $50.9 million, $192.0 million, and $231.5 million, respectively, offset by the purchase of property and equipment of $33.4 million, $20.0 million, and $20.9 million, respectively.

Financing activities

During the year ended December 31, 2023, cash provided by financing activities was $31.6 million, consisting primarily of net proceeds from issuance of common stock under the ATM facility of $27.0 million and $4.6 million in proceeds from our employee stock purchase program and the exercise of stock options.

During the year ended December 31, 2024, cash provided by financing activities was $199.7 million, consisting primarily of net proceeds from issuance of common stock of $181.0 million, $11.0 million in proceeds from our employee stock purchase program and the exercise of stock options, and net proceeds of $7.7 million from a loan to fund tenant improvements for our manufacturing facility in Bothell, Washington.

During the year ended December 31, 2023, cash provided by financing activities was $31.6 million, consisting primarily of net proceeds from issuance of common stock of $27.0 million and $4.6 million in proceeds from our employee stock purchase program and the exercise of stock options.

During the year ended December 31, 2022, cash provided by financing activities was $4.9 million, consisting primarily of proceeds from our employee stock purchase program and the exercise of stock options.

During the year ended December 31, 2021, cash provided by financing activities was $631.7 million, consisting primarily of net proceeds from our IPO of $626.4 million and $5.3 million in proceeds from our employee stock purchase plan and the exercise of stock options.

Contractual obligations and commitments

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As of December 31, 2024, the timing and likelihood of achieving the milestones and success payments and generating future product sales are uncertain, and therefore any related payments are not included in the table above.

We also enter into agreements in the normal course of business for clinical trials, sponsored research, preclinical studies, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice.

We also enter into agreements in the normal course of business for sponsored research, preclinical studies, clinical trials, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice.

These obligations and commitments are not included in the table above.

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Because our marketable securities are primarily short-term in duration, we believe that our exposure to interest rate risk is not significant, and a hypothetical 10% change in market interest rates during any of the periods presented would not have had a significant impact on the total value of our portfolio.

We had no debt outstanding as of December 31, 2023.

As of December 31, 2024, we had no debt outstanding that is subject to interest rate variability.

Market capitalization and common stock price sensitivity

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Changes in our market capitalization and the fair value of our common stock as of each balance date may have a relatively large change in the estimated valuation of the success payment liabilities and resulting expense or gain.

For example, for the Cobalt Success Payment, keeping all other variables constant, a hypothetical 20% increase in our market capitalization as of December 31, 2023 from $0.8 billion to $1.0 billion would have decreased the gain recorded in the year ended December 31, 2023 by $2.9 million to $5.0 million.

A hypothetical 20% decrease in our market capitalization from $0.8 billion to $0.6 billion would have increased the gain recorded in the year ended December 31, 2023 by $2.6 million to $10.5 million.

For the Harvard Success Payments, keeping all other variables constant, a hypothetical 20% increase in our common stock price as of December 31, 2023 from $4.08 per share to $4.90 per share would have decreased the gain recorded in the year ended December 31, 2023 by $0.6 million, resulting in a $0.2 million expense.

For example, for the Cobalt Success Payment, keeping all other variables constant, a hypothetical 20% increase in our market capitalization as of December 31, 2024 from $365.0 million to $438.0 million would have decreased the gain recorded in the year ended December 31, 2024 by $1.1 million to $8.1 million.

A hypothetical 20% decrease in our market capitalization from $365.0 million to $292.0 million would have increased the gain recorded in the year ended December 31, 2024 by $1.0 million to $10.2 million.

For the Harvard Success Payments, keeping all other variables constant, a hypothetical 20% increase in our common stock price as of December 31, 2024 from $1.63 per share to $1.96 per share would have decreased the gain recorded in the year ended December 31, 2024 by $0.1 million to $1.2 million.

A hypothetical 20% decrease in the common stock price from $1.63 per share to $1.30 per share would have increased the gain recorded in the year ended December 31, 2024 by $0.1 million to $1.4 million.

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit )

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Regis tered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Sana Biotechnology, Inc.

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We have audited the accompanying consolidated balance sheets of Sana Biotechnology, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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Seattle, Washington

February 29, 2024

March 17, 2025

Sana Biotechnology, Inc.

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Total current assets

Long-term marketable securities

Property and equipment, net

Operating lease right-of-use assets

Long-term restricted cash

Intangible asset

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Operating lease liabilities

Contingent consideration

Total current liabilities

Operating lease liabilities, net of current portion

Contingent consideration, net of current portion

Contingent consideration

Success payment liabilities

Other non-current liabilities

Total liabilities

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Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

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Interest income, net

Other income (expense), net

Other expense, net

Net loss per common share – basic and diluted

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Year Ended December 31,

Other comprehensive income (loss), net of tax:

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities, net

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Sana Biotech nology, Inc.

Consolidated Statements of Convertible Pr eferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

(in thousands)

Convertible Preferred

Comprehensive

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Balance as of December 31, 2021

Conversion of convertible preferred stock into common stock upon initial public offering

Issuance of common stock in initial public offering, net of $ 49,220 in offering costs

Issuance of common stock from at the market offering, net of issuance costs of $ 625

Vesting of restricted stock

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Issuance of common stock related to employee stock purchase plan

Stock-based compensation

Stock-based compensation expense

Unrealized loss on marketable securities, net

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Issuance of common stock related to employee stock purchase plan

Stock-based compensation

Unrealized loss on marketable securities, net

Stock-based compensation expense

Unrealized gain on marketable securities, net

Balance as of December 31, 2023

Issuance of common stock from at the market offering, net of issuance costs of $ 158

Issuance of common stock from follow-on offering and accompanying pre-funded warrants, net of issuance costs of $ 9,741

Vesting of restricted stock

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Issuance of common stock related to employee stock purchase plan

Stock-based compensation

Stock-based compensation expense

Unrealized gain on marketable securities, net

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Purchases of property and equipment

Other investing activities

Net cash provided by (used in) investing activities

Net cash provided by investing activities

FINANCING ACTIVITIES:

Proceeds from initial public offering, net of issuance costs

Proceeds from issuance of common stock, net

Proceeds from issuance of common stock under at the market offering

Proceeds from employee stock purchase plan and exercise of stock options

Proceeds from issuance of common stock from equity financings, net

Proceeds from tenant improvement loan, net

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

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Cash received for tenant improvement allowances

Remeasurement of operating lease right-of-use asset for lease modification

Derecognition of operating lease right-of-use asset for lease termination

Derecognition of operating lease right-of-use asset for lease modification

See accompanying notes.

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(the Company or Sana) is a biotechnology company focusing on utilizing engineered cells as medicines.

The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, preparing for and executing clinical trials of its product candidates and supporting clinical trials of product candidates developed using its technologies, acquiring technology, organizing and staffing the Company, business planning, establishing and maintaining the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, preparing for and executing clinical trials of its product candidates and supporting clinical trials of product candidates developed using its technologies, acquiring technologies, staffing the Company, business planning, establishing and maintaining the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

Liquidity and capital resources

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Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations with the proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

In the event that additional financing is required, the Company may not be able to raise it on terms acceptable to it or at all.

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock for net proceeds of approximately $ 179.9 million, after deducting underwriting discounts and commissions and estimated offering expenses.

In the event that additional financing is required, the Company may not be able to raise capital on terms acceptable to it or at all.

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses.

In August 2022, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), acting as sales agent, pursuant to which it may offer and sell through Cowen up to $ 150.0 million in shares of the Company’s common stock from time to time in a series of one or more at the market equity offerings (collectively, the ATM facility).

As of December 31, 2023, the Company sold an aggregate of 4.7 million shares of the Company's common stock under the ATM facility for net proceeds of $ 27.6 million in net proceeds, after deducting commissions and expenses.

In February 2021, the Company completed its initial public offering (IPO) and issued 27.0 million shares of its common stock, including 3.5 million shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, and received $ 626.4 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses.

In October 2023, the Company announced a strategic repositioning and associated workforce reduction to increase its focus on its ex vivo cell therapy product candidates.

In addition to an increased focus on its ex vivo programs, the Company reduced its near-term investment in its fusogen platform for in vivo gene delivery, including the delay of the investigational new drug application (IND) submission for its SG299 program, and reduced its workforce by approximately 29 %.

The strategic repositioning and associated workforce reduction was substantially completed in 2023.

During the year ended December 31, 2023, the Company recognized $ 5.2 million of cash-based expenses in general and administrative expense related to employee severance, benefits, and related costs for employees impacted by the reduction in force.

As of December 31, 2024, the Company sold an aggregate of 4.9 million shares of the Company's common stock under the ATM facility for net proceeds of $ 28.6 million, after deducting commissions and expenses.

In November 2024, the Company announced a portfolio prioritization to prioritize clinical and preclinical development in type 1 diabetes, B-cell mediated autoimmune diseases, refractory B-cell malignancies, and the fusogen platform for generating in vivo CAR T cells.

The Company suspended development of SC291, the Company's HIP-modified CD19 allogeneic CAR T therapy, in oncology and SC379, its glial progenitor cell program, as it seeks partnerships for these programs.

The portfolio prioritization resulted in a workforce reduction of approximately 45 %.

During the year ended December 31, 2024, the Company recognized $ 5.8 million of cash-based expenses related to employee severance, benefits, and related costs.

The Company anticipates that the portfolio update and associated workforce reduction will be substantially complete in the first quarter of 2025.

The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future.

As of December 31, 2023, the Company had cash, cash equivalents, and marketable securities of $ 205.2 million, and an accumulated deficit of $ 1.3 billion, which includes non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $ 10.3 million and $ 58.3 million, respectively.

As of December 31, 2024, the Company had cash, cash equivalents, and marketable securities of $ 152.5 million, and an accumulated deficit of $ 1.6 billion, which includes cumulative non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $ 2.1 million and $ 57.7 million, respectively.

Management has determined that the Company's current capital resources may not be sufficient to fund its planned operations for at least one year from the date of this Annual Report, and there is substantial doubt as to the Company's ability to continue as a going concern .

The Company's ability to continue as a going concern will depend on, among other things, its ability to obtain additional funding and appropriately manage the amount of cash used to fund its operations.

The Company plans to address this condition through proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements.

If the Company is unable to obtain such financing, it may be required to modify its operational plans by delaying, reducing the scope of, or ceasing its research and development programs.

Summary of significant accounting policies

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When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is recorded in research and development expenses in the period realized.

The Company recognized $ 7.0 million in research and development expenses for the impairment of certain lab equipment and leasehold improvement as a result of the strategic repositioning in October 2023.

During the fourth quarters of 2024 and 2023, the Company recognized $ 1.9 million and $ 7.0 million, respectively, in research and development expenses for the impairment of certain lab equipment and leasehold improvement as a result of the portfolio prioritization s in the fourth quarters of 2024 and 2023.

Repairs and maintenance are expensed as incurred.

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Nonrefundable, advance payments for goods or contracts for services are deferred, and expense is recognized in the period in which the goods are received or the services are rendered.

Research and development expense consists of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs), clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with the Company’s goal of translating engineered cells to medicines, facility expenses, including rent and depreciation, and other allocated expenses.

Research and development expense consists of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, external research and development expenses incurred under arrangements with third parties, including CDMO manufacturing costs (including pass-through costs), clinical trial costs, costs for laboratory supplies, costs to acquire and license technologies aligned with the Company’s ex vivo and in vivo cell engineering platforms, facility expenses, including rent, depreciation, and costs related to the impairment of certain lab equipment and leasehold improvements, and other allocated expenses.

Research and development related success payments and contingent consideration

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General and administrative expenses

General and administrative expenses consist of personnel costs, including salaries, benefits, and non-cash stock-based compensation, for employees in finance, legal, executive, human resources, information technology, and other administrative functions, legal and consulting fees, recruiting costs, and facility costs not otherwise included in research and development expenses.

General and administrative expenses consist of personnel costs, including salaries, benefits, and non-cash stock-based compensation, for employees in finance, legal, executive, human resources, information technology, and other administrative functions, legal and consulting fees, recruiting costs, restructuring expenses, and facility costs not otherwise included in research and development expenses.

Legal fees include those related to corporate and patent matters.

Included in general and administrative expenses for the year ended December 31, 2023, are costs related to the October 2023 strategic repositioning and costs incurred for the early termination of the Company's lease (Fremont lease) for its previously planned manufacturing facility in Fremont, California (Fremont facility).

Included in general and administrative expenses for the year ended December 31, 2022 were costs related to the November 2022 restructuring and the write-off of construction in progress costs incurred in connection with the Fremont facility.

Included in general and administrative expenses for the year ended December 31, 2023 are costs incurred for the early termination of the Company's lease (Fremont lease) for its previously planned manufacturing facility in Fremont, California (Fremont facility).

The Company determines its deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard-setting bodies that the Company adopts as of the specified effective date.

Unless otherwise discussed, the Company does not believe that the adoption of any recently issued standards has had or may have a material impact on its condensed consolidated financial statements or disclosures.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

Unless otherwise discussed, the Company does not believe that the adoption of any recently issued standards has had or may have a material impact on its consolidated financial statements or disclosures.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures.

The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment, among other disclosure requirements.

The Company adopted the guidance in the fiscal year 2024.

There was no impact on the Company's reportable segment identified and additional required disclosures have been included in Note 3, Segment reporting, to the Company's consolidated financial statements included in this Annual Report.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

This ASU is effective for the Company's fiscal year 2025.

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The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) , the Company's Chief Executive Officer, in making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business in one operating segment.

When evaluating the Company's financial performance, the CODM reviews total expenses and expenses by function.

Further, the CODM reviews the segment's assets based on total assets reported on the consolidated balance sheet.

The table below is a summary of the segment loss, including significant segment expenses (in thousands):

Twelve months ended December 31,

Operating expenses:

Research and laboratory

Technical operations and manufacturing

Clinical development

Facility costs

Support functions

Stock-based compensation

Portfolio prioritization costs

Research and development related success payments and contingent consideration

Total operating expenses

Loss from operations

Interest income, net

Other expense, net

(1) Other segment expenses includes licensing costs, consulting fees, business taxes, insurance costs, impairment of certain lab equipment and leasehold improvements for the years ended December 31, 2024 and 2023, and costs incurred for the early termination of the Fremont lease for the year ended December 31, 2023.

Cobalt Biomedicine, Inc.

In February 2019, the Company acquired 100 % of the outstanding equity of Cobalt, a privately-held early-stage biotechnology company developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells (the Cobalt acquisition).

As part of the Cobalt acquisition, the Company recorded an intangible asset of $ 59.2 million, which consists of IPR&D that is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset and will be amortized over its estimated useful life.

As part of the Cobalt acquisition, the Company recorded an intangible asset of $ 59.2 million, which consists of in-process research and development that is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset and will be amortized over its estimated useful life.

If the research and development technology is abandoned, an impairment charge will be recorded.

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The following table sets forth various thresholds for the Company’s market capitalizations as of the date of a change of control and the resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration:

Sana market capitalization upon a change of control and resulting impact to Cobalt Success

Payment and additional potential Cobalt Contingent Consideration

Sana market capitalization upon a change of control and resulting impact to Cobalt Success Payment and additional potential Cobalt Contingent Consideration

Cobalt Success

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As of December 31, 2024 and 2023, the estimated fair value of the Cobalt Success Payment liability was $ 4.2 million and $ 11.2 million, respectively, and was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Success Payment, the Company recognized gains of $ 7.9 million and $ 69.3 million, and an expense of $ 23.6 million for the years ended December 31, 2023, 2022, and 2021, respectively .

As of December 31, 2023, the estimated fair value of the Cobalt Contingent Consideration was $ 109.6 million, and was recorded in long-term liabilities.

As of December 31, 2022, the estimated fair value of the Cobalt Contingent Consideration was $ 150.4 million of which $ 55.4 million was recorded in short-term liabilities and $ 95.0 million was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Contingent Consideration, the Company recognized gains of $ 40.8 million and $ 3.4 million, and an expense of $ 31.8 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

In connection with the change in estimated fair value of the Cobalt Success Payment, the Company recognized gains of $ 6.9 million, $ 7.9 million, and $ 69.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2024 and 2023, the estimated fair value of the Cobalt Contingent Consideration was $ 109.0 million and $ 109.6 million, respectively, and was recorded in long-term liabilities.

In connection with the change in estimated fair value of the Cobalt Contingent Consideration, the Company recognized gains of $ 0.6 million, $ 40.8 million, and $ 3.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

License and collaboration agreements

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The Company made an upfront payment of $ 50.0 million to Beam, which was recorded in research and development expense for the year ended December 31, 2021.

Additionally, under the terms of the agreement, the Company may be obligated to pay up to $ 65.0 million for each licensed product in specified developmental and commercial milestone payments and royalties on licensed products.

Additionally, under the terms of the agreement, the Company may be obligated to pay up to $ 65.0 million in specified developmental and commercial milestone payments and royalties on licensed products for each licensed product.

At the time of the entry into the option and license agreement, a member of the Company’s board of directors was a beneficial owner of greater than 10 % of the outstanding shares of Beam.

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In March 2019, the Company entered into an exclusive license agreement with Harvard to access certain intellectual property for the development of hypoimmune-modified cells.

The Company paid to Harvard aggregate consideration of $ 12.0 million, comprising $ 9.0 million in common stock and $ 3.0 million in cash.

Under the terms of the agreement, the Company may be required to pay to Harvard up to an aggregate of $ 175.0 million in success payments, payable in cash, based on increases in the fair value of the Company’s common stock.

Under the terms of the agreement, the Company paid to Harvard aggregate consideration of $ 12.0 million, comprising $ 9.0 million in common stock and $ 3.0 million in cash.

Additionally, the Company may be required to pay to Harvard up to an aggregate of $ 175.0 million in success payments, payable in cash, based on increases in the fair value of the Company’s common stock.

The potential Harvard Success Payments are based on multiples of increased value ranging from 5x to 40x, based on a comparison of the fair market value of the Company’s common stock relative to the original issuance price of $ 4.00 per share at ongoing pre-determined valuation measurement dates.

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As of December 31, 2024 and December 31, 2023, the estimated fair value of the Harvard Success Payment liability was $ 0.3 million and $ 1.6 , respectively, and was recorded in long-term liabilities.

In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized gains of $ 0.3 million and $ 12.2 million, and an expense of $ 2.4 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized gains of $ 1.3 million, $ 0.3 million, and $ 12.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Restricted cash

The Company maintains standby letters of credit that are collateralized with a bank account at a financial institution in accordance with certain lease agreements.

The aggregate amount of such standby letters of credit was $ 3.8 million and $ 10.5 million as of December 31, 2023 and 2022, respectively.

The Company terminated the Fremont lease in the third quarter of 2023, and as a result, the Company’s letter of credit of $ 6.7 million related to the Fremont lease was returned to the Company and included in cash and cash equivalents.

The aggregate amount of such standby letters of credit was $ 3.8 million as of December 31, 2024 and 2023, respectively.

Fair value measurements

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government and agency securities

Corporate debt securities

Total cash equivalents

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Total short-term marketable securities

Long-term marketable securities:

government and agency securities

Total long-term marketable securities

Total financial assets

Financial liabilities:

Short-term financial liabilities:

Contingent consideration

Total short-term financial liabilities

Long-term financial liabilities:

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government and agency securities and corporate debt securities and are valued based on either recent trades of securities in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

The following table summarizes available-for-sale debt securities in a continuous unrealized loss position for less than and greater than twelve months, for the periods presented:

Less than 12 months

12 months or greater

Unrealized losses

(in thousands)

December 31, 2023

government and agency securities

Corporate debt securities

December 31, 2022

government and agency securities

Corporate debt securities

The Company determined that there was no material change in the credit risk of the above investments during the year ended December 31, 2023.

There were no available-for-sale debt securities in a material loss position as of December 31, 2024 and 2023.

The Company determined that there was no material change in the credit risk of the investments during the year ended December 31, 2024.

As such, an allowance for credit losses has not been recognized.

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Balance as of December 31, 2023

Changes in fair value – expense (gain)

Balance as of March 31, 2023

Changes in fair value – expense

Balance as of June 30, 2023

Balance as of March 31, 2024

Changes in fair value – gain

Balance as of September 30, 2023

Balance as of June 30, 2024

Changes in fair value – expense (gain)

Balance as of September 30, 2024

Changes in fair value – gain

Balance as of December 31, 2024

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Depreciation expense was $ 17.4 million, $ 24.6 million, and $ 15.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Depreciation expense for the y ear ended December 31, 2023 includes $ 7.0 million for the impairment of certain lab equipment and leasehold improvements which were primarily related to the strategic repositioning undertaken in October 2023.

Depreciation expense for the years ended December 31, 2024 and 2023 includes $ 1.9 million and $ 7.0 million, respectively, for the impairment of certain lab equipment and leasehold improvements which were primarily related to the portfolio prioritization s in the fourth quarters of 2024 and 2023.

Accrued liabilities

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The initial term of the lease expires in February 2039, with the option to extend the lease for up to three additional five-year terms.

The lease agreement also provides for up to $ 19.9 million for reimbursement of tenant improvements, as well as an additional $ 8.0 million for tenant improvements, available at the Company’s election, which the Company would be obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5 % per year.

The lease agreement also provides for up to $ 19.9 million for reimbursement of tenant improvements, as well as an additional $ 8.0 million loan for tenant improvements, available at the Company’s election, which the Company would be obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5 % per year (the Tenant Improvement Loan).

The Company elected to receive the Tenant Improvement Loan in the second quarter of 2024.

As of December 31, 2024, $ 0.3 million was included in accrued expenses and other current liabilities and $ 7.4 million was included in other non-current liabilities.

The Company is obligated to pay base rent of approximately $ 68.8 million over the initial term of the lease.

In accordance with the lease agreement, the Company has obtained a letter of credit in the amount of $ 1.6 million.

The Company recognized the ROU asset and lease liability in the three months ended March 31, 2023 when the lease commenced.

In July 2021, the Company entered into a lease for the Fremont facility with the intent to establish and develop its manufacturing operations at such facility.

The Company decided in June 2022 to establish and develop its manufacturing operations at the Bothell facility rather than the Fremont facility.

In the third quarter of 2023, the Company entered into a lease termination agreement for the early termination of the Fremont lease.

On the lease termination date, the Company derecognized the remaining balances related to the ROU asset and lease liability of $ 14.2 million and $ 15.9 million, respectively, and incurred fees of $ 4.4 million, resulting in a loss on lease termination of $ 2.7 million, which is included in general and administrative expense for the twelve months ended December 31, 2023.

In April 2024, the Company amended the terms of certain agreements for its vivarium spaces in Cambridge, Massachusetts and South San Francisco, California, which resulted in these agreements no longer requiring recognition on the balance sheet.

In the second quarter of 2024, the Company derecognized the remaining balances related to the right-of-use asset and lease liability of $ 6.4 million and $ 6.2 million, respectively.

The following table contains additional information related to the Company’s operating leases:

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March 2019 to January 2020

November 2025 to February 2028

June 2027 to February 2028

South San Francisco, CA

1 unchanged sentence

December 2019 to April 2022

April 2024 to April 2030

Rochester, NY

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Office/Laboratory/ Manufacturing

Throughout the term of the lease agreements, the Company is responsible for paying, in addition to base rent, certain operating costs, such as common area maintenance, taxes, utilities, and insurance.

Throughout the term of each lease agreement, the Company is responsible for paying, in addition to base rent, certain operating costs, such as common area maintenance, taxes, utilities, and insurance.

These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

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imputed interest

tenant improvement allowances

Present value of operating lease liabilities

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Stockholders’ equity

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock, for net proceeds of approximately $ 180.0 million, after deducting underwriting discounts and commissions and offering expenses.

The pre-funded warrants have an exercise price of $ 0.0001 per share of common stock.

As the pre-funded warrants are indexed to the Company’s common stock and otherwise meet the requirements to be classified in equity, the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheet.

The pre-funded warrants are exercisable at any time;

however, the holders of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise.

The holders of pre-funded warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company.

The pre-funded warrants do not expire.

During the twelve months ended December 31, 2024, no pre-funded warrants were exercised.

In August 2022, the Company entered into a sales agreement with Cowen, acting as sales agent, pursuant to which it may offer and sell through Cowen up to $ 150.0 million in shares of the Company's common stock from time to time in a series of one or more at the market equity offerings.

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72.5 % – 75.0 %

70.0 % – 72.5 %

Expected term (years)

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Value per Share

Unvested shares as of December 31, 2022

Unvested shares as of December 31, 2023

The fair value of vested RSAs was immaterial , $ 1.8 million, and $ 1.5 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Unvested as of December 31, 2023

Unvested as of December 31, 2024

No RSAs vested during the year ended December 31, 2024.

The fair value of vested RSAs was immaterial for the year ended December 31, 2023, and $ 1.8 million for the year ended December 31, 2022.

The fair value of vested RSUs was $ 6.4 million, $ 1.9 million, and $ 0.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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Net deferred taxes assets

The Tax Cuts and Jobs Act contained a provision which requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022.

Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique.

This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized over five years for domestic research and development and fifteen years for foreign research and development.

We have included the impact of this provision, which results in a deferred tax asset of approximately $ 101.1 million as of December 31, 2023.

The valuation allowance relates primarily to net U.S.

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The Company matches each participant’s 401(k) contributions, up to $ 4,000 per year per participant.

Subsequent event

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock, for net proceeds of approximately $ 179.9 million, after deducting underwriting discounts and commissions and estimated offering expenses.

Changes in and Disagreements with Accoun tants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis